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Oil prices gain above $98 on US economic outlook

The price of oil edged up above $98 a barrel Tuesday after strong U.S. factory data and an apparent easing in tensions over Ukraine.

By early afternoon in Europe, benchmark U.S. crude for April delivery was up 23 cents to $98.31 a barrel in electronic trading on the New York Mercantile Exchange. On Monday, the Nymex contract fell 81 cents to close at $98.08.

Brent crude, used to set prices for international varieties of crude, was up 21 cents to $106.45 on the ICE Futures exchange in London.

Data from the Federal Reserve showed that U.S. factory output in February rose at its fastest clip in six months after disruptions from severe winter weather. That bodes well for demand for oil in the world's largest economy.

Oil prices were also underpinned by the narrow scope of U.S and European Union sanctions against Russia for its intervention in Crimea. On Tuesday, Russian President Vladimir Putin signed a treaty to annex Crimea but suggested his country was not seeking to take over other parts of Ukraine.

Continued risk factors include Libya's ongoing struggle to normalize its oil production and exports, which have been hampered by conflicts between the government and rebel groups seeking autonomy for the country's eastern region.

On Monday, U.S. Navy SEALs seized an oil tanker near Cyprus, stopping an attempt by a Libyan militia to sell the shipload of crude in defiance of the Libyan government.

Investors are also awaiting fresh information on U.S. stockpiles of crude and refined products.

Statistics for the week ending March 14 are expected to show a build of 2.6 million barrels in crude oil stocks and a draw of 1.6 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.

In other energy futures trading on Nymex:

— Wholesale gasoline inched up 0.32 cent to $2.8763 a gallon.

— Heating oil gained 0.63 cent to $2.8847 a gallon.

— Natural gas fell 3.3 cents to $4.503 per 1,000 cubic feet.

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